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The Russian Finance ministry has apparently been talking to the Chinese about the SDR (special drawing rights) currency raised by a visiting functionary, who in an apoplectic nervous breakdown, publicly derided the dollar as a junk currency in mid-February (see my older February posts).
DJ UPDATE: Russia Willing To Invest $10 Bln In IMF Bonds
By Lidia Kelly Of DOW JONES NEWSWIRES
MOSCOW (Dow Jones)--Russia is willing to invest up to $10 billion in bonds that could be issued by the International Monetary Fund, Finance Minister Alexei Kudrin said Wednesday.
"We are currently discussing in the government the possibility of making a decision in the near future about investing up to $10 billion in IMF bonds," Kudrin told President Dmitry Medvedev in a televised meeting.
The IMF is preparing its first bond offering, potentially tailored to the BRIC countries of Brazil, Russia, China and India.
Russia's offering would equal that of India and would be roughly about a quarter of the $40 billion China is expected to contribute to boost the IMF's resources.
At the Group of 20 leading industrial and developing nations summit in London last month, IMF Managing Director Dominique Strauss-Kahn said the fund has the authority to issue bonds, although few details have emerged since.
Russian officials said an IMF decision on the bonds could come in the autumn.
The bond would most likely be denominated in an IMF quasi-currency called special drawing rights, or SDRs, which the fund created in 1969 as a way of supporting its members. Russia and China would welcome SDR bonds, as both countries have been advocating that SDRs could ultimately replace the dollar as a global reserve currency.
At the IMF and World Bank spring meeting in Washington last month, Russian Finance Minister Alexei Kudrin said his government is interested in purchasing some of the securities, providing they are liquid enough, enabling quick withdrawal in case of need.
Russia's contribution would be to spend some of its massive gold and foreign exchange reserves, held at the central bank, on purchasing the IMF bonds.
Although Russia is mired in a deep recession - with the economy expected to contract by as much as 8% this year - the country is still in possession of the world's third-largest foreign exchange reserves, standing at $391.3 billion as of May 15.
Kudrin said earlier this week that Russia itself may have to borrow around $7 billion abroad next year to finance its budget deficit and $10 billion in the coming years. He added, however, that Russia won't turn to the IMF for a loan.
